CPG Industry Resilient in Current Economy: Study
The consumer packaged goods (CPG) industry performed considerably better than the rest of the market in 2008, as measured by the S&P 500 and Dow Jones Industrial Averages, outpacing both by at least 10 points, according to a report by the Grocery Manufacturers Association (GMA) and PricewaterhouseCoopers LLP (PwC). The study additionally found that CPG manufacturer median sales increased 10 percent last year, down just slightly from 2007 median sales figures.
Compiled from research, interviews and financial data on 157 companies in the food, beverage and consumer products sector, “The 2009 Financial Performance Report: Focusing on Today, Envisioning Tomorrow” is the latest annual industry report from GMA and PwC.
“Given the CPG industry’s laser focus on delivering value, innovation and investment in the future, it’s no surprise that it appears to be weathering this economic cycle better than other sectors,” noted GMA president and CEO Pamela Bailey. “This performance is testimony to the fact that CPG companies are fulfilling their core mission, which is
giving consumers the quality products they need at an affordable price.”
Other key findings from the report include the following:
--The food sector saw sales growth of 10.2 percent, showing that consumers are more often cooking and eating at home. The beverage sector experienced 9.9 percent sales growth, and household products reported 9.1 percent sales growth
--Overall CPG company median shareholder returns for 2008 were down a little more than 25 percent -- a significantly better performance than the rest of the market
--The food sector was the performance leader among the major CPG sectors, with 2008 median shareholder returns down only 21 percent
--Selling, general and administrative (SG&A) spending relative to sales stayed steady from 2007 to 2008, an indication that companies are actively marketing and innovating existing product portfolios, as well as investing in the future marketplace
“There are lessons to be learned from the CPG top performers, which are well positioned to emerge from this recession stronger than ever before, as they continue to invest in their core brands, take advantage of scale to produce healthy margins, and manage down debt," said John Maxwell, consumer packaged goods and retail industry leader at PwC. "Finding new and better ways to sustain cost reductions, manage IT-related risks, invest strategically to capture market share, and take thoughtful approaches to tax credits and incentives are a few recommendations for CPG companies as they prepare for the recovery."
That doesn’t mean, however, that there isn’t room for improvement within the sector, Maxwell warned. “Although the CPG industry fared better than other industries, it cannot be complacent and must remain focused on the constantly evolving consumer purchase behaviors,” he observed. “This is critical as suppliers, retailers, and restaurants continue to be impacted by the liquidity crunch. There are opportunities for CPG industry companies that can capitalize on the trend of consumers focusing on product value within categories, on the move from eating out to eating in, and as consumers that have de-loaded the pantry begin to re-load.”
“The 2009 Financial Performance Report: Focusing on Today, Envisioning Tomorrow” will be presented via webcast by PwC and GMA on June 9 at 2:00 p.m. EDT. For registration information, visit www.meetpwc.com/GMA_PwC_webcast, and for an electronic copy of the complete report, visit www.pwc.com/us/retailandconsumer or www.gmaonline.org/publications.
Compiled from research, interviews and financial data on 157 companies in the food, beverage and consumer products sector, “The 2009 Financial Performance Report: Focusing on Today, Envisioning Tomorrow” is the latest annual industry report from GMA and PwC.
“Given the CPG industry’s laser focus on delivering value, innovation and investment in the future, it’s no surprise that it appears to be weathering this economic cycle better than other sectors,” noted GMA president and CEO Pamela Bailey. “This performance is testimony to the fact that CPG companies are fulfilling their core mission, which is
giving consumers the quality products they need at an affordable price.”
Other key findings from the report include the following:
--The food sector saw sales growth of 10.2 percent, showing that consumers are more often cooking and eating at home. The beverage sector experienced 9.9 percent sales growth, and household products reported 9.1 percent sales growth
--Overall CPG company median shareholder returns for 2008 were down a little more than 25 percent -- a significantly better performance than the rest of the market
--The food sector was the performance leader among the major CPG sectors, with 2008 median shareholder returns down only 21 percent
--Selling, general and administrative (SG&A) spending relative to sales stayed steady from 2007 to 2008, an indication that companies are actively marketing and innovating existing product portfolios, as well as investing in the future marketplace
“There are lessons to be learned from the CPG top performers, which are well positioned to emerge from this recession stronger than ever before, as they continue to invest in their core brands, take advantage of scale to produce healthy margins, and manage down debt," said John Maxwell, consumer packaged goods and retail industry leader at PwC. "Finding new and better ways to sustain cost reductions, manage IT-related risks, invest strategically to capture market share, and take thoughtful approaches to tax credits and incentives are a few recommendations for CPG companies as they prepare for the recovery."
That doesn’t mean, however, that there isn’t room for improvement within the sector, Maxwell warned. “Although the CPG industry fared better than other industries, it cannot be complacent and must remain focused on the constantly evolving consumer purchase behaviors,” he observed. “This is critical as suppliers, retailers, and restaurants continue to be impacted by the liquidity crunch. There are opportunities for CPG industry companies that can capitalize on the trend of consumers focusing on product value within categories, on the move from eating out to eating in, and as consumers that have de-loaded the pantry begin to re-load.”
“The 2009 Financial Performance Report: Focusing on Today, Envisioning Tomorrow” will be presented via webcast by PwC and GMA on June 9 at 2:00 p.m. EDT. For registration information, visit www.meetpwc.com/GMA_PwC_webcast, and for an electronic copy of the complete report, visit www.pwc.com/us/retailandconsumer or www.gmaonline.org/publications.